Coca-Cola Co. v. J. G. Butler & Sons

• Decision Date: 07 February 1916
• Docket Number: 1857.
• Citation: 229 F. 224
• Parties: COCA-COLA CO. v. J. G. BUTLER & SONS.
• Court: U.S. District Court — Eastern District of Arkansas

229 F. 224

COCA-COLA CO. v. J. G. BUTLER & SONS.

No. 1857.

United States District Court, E.D. Arkansas, Western Division.

February 7, 1916

The plaintiff seeks to enjoin the defendants, who constitute a mercantile firm, doing business under the firm name of J. G Butler & Sons, from using, in connection with the manufacture, advertising, offering for sale, or sale of any beverage, the words 'Coca-Cola,' or any like word or words, and in any other manner infringing upon the plaintiff's rights as owner of the trade-mark 'Coca-Cola,' and also seeks an accounting of the damages sustained by it, by reason of the unlawful use of its trade-mark.

The material allegations in the complaint are: That the plaintiff is now, and has been ever since 1892, manufacturing and marketing a syrup for making a beverage sold to the public under the name of 'Coca-Cola.' That it became vested with and entitled to the sole and exclusive right to use that trade-mark, which has been duly registered in the United States Patent Office on May 14, 1892, under the provisions of the Act of Congress of March 3, 1891, c. 565, 26 Stat. 1106. That on April 22, 1905, registration of the said trade-mark was again allowed by the Commissioner of Patents under the Act of Congress approved February 20, 1905, c. 592, 33 Stat 724. That it has manufactured and marketed, and is now manufacturing and marketing, two kinds of said syrup--one designed and adapted for making a beverage by mixing with carbonated water at soda fountains in the presence of the purchaser, which is intended for immediate consumption, and is a fountain drink, and is well known to the public. The other kind is designed and adapted to be used, and is used for manufacturing a carbonated beverage put up and sold for consumption in bottles; each of them being sold by the plaintiff in distinctive packages, bearing its trade-mark name on distinctive labels. That it has at all times insured and safeguarded the manufacture and bottling of said carbonated bottled beverage made from its 'Coca-Cola' bottling syrup, by selecting, designating, and licensing the bottlers using the said bottling syrup, and inspecting and supervising the manufacture, carbonating, and bottling of said beverage by said bottlers, so as to safeguard and insure the purchasers and consumers of said bottled product as to the quality, purity, and character thereof, and has under such circumstances and conditions, and none others, allowed and permitted the use of the name 'Coca-Cola,' as the trade-mark therefor, and as plaintiff's guaranty of the authenticity of the said carbonated and bottled beverage, and plaintiff's supervision, inspection, and approval thereof, and responsibility therefor. So that in connection with a bottled drink the name 'Coca-Cola' is plaintiff's guaranty of genuineness and fidelity that such drink is properly made of proper materials, and is plaintiff's assurance of cleanliness and excellence of manufacture, carbonating bottling, and sale, and is so relied upon by the purchasers and the public. That it has expended large sums of money in advertising to the public that its beverage, under its trade-name, can be had at fountains and in bottles, and that the bottled product which is offered to the public in bottles, with plaintiff's trade-mark name 'Coca-Cola,' applied to the bottled beverage, means to the public a beverage produced wholly under conditions which plaintiff supervises and controls, and one guaranteed throughout by plaintiff to be so produced, and to be wholesome, palatable, and uniform, and is so understood by the public. It is then charged that the defendants have put upon the market in bottles a product somewhat resembling in taste and appearance the plaintiff's bottled 'Coca-Cola,' but which is not plaintiff's bottled 'Coca-Cola,' and had applied to the crown of the bottles containing said defendant's product, and upon labels attached to the bottles, the name 'Coca-Cola,' as the trade-mark name therefor, without plaintiff's permission or authority; that by reason thereof the public is being deceived into the belief, contrary to the fact, that the product of the defendants is the bottled product guaranteed by the plaintiff, as aforesaid.

The answer of the defendants pleads that they are not sufficiently informed as to some of the allegations that are set out in the complaint, and therefore demand strict proof thereof. They deny that they have put upon the market in bottles any product resembling in taste and appearance the plaintiff's bottled 'Coca-Cola,' but allege the truth to be that the article they have put on the market is the genuine, identical article and product known as 'Coca-Cola.' They admit that they have applied to the crowns of the bottles containing such product, and upon labels attached thereto, the name 'Coca-Cola,' but deny that it was done without authority. They allege that they purchased said product for the identical purpose to which they have applied the same, from individuals and corporations who were the lawful owners thereof, and authorized to sell the same to these defendants for the purpose of retailing the same, bottled and carbonated as 'Coca-Cola,' and therefore they deny that the result of this use by them has been to deceive the public into the belief, contrary to the fact, that the product of the defendants is the product guaranteed by plaintiff to be properly made of proper materials, and made, carbonated, and bottled under the plaintiff's authority and supervision. They then plead that the plaintiff, by adopting a system of exclusive contracts, has undertaken to divide the country, and especially the territory in which the defendants are operating, into districts, whereby they have agreed to sell to such persons and corporations alone, and exclusively thus contracted, which was done for the purpose of establishing and maintaining a monopoly in the sale of said product, and preventing and destroying competition in the sale thereof, among the different purchasers, and have refused and still refuse to sell and furnish such product or commodity to the defendants upon the same terms and conditions and at the same price as they are furnishing and selling this commodity to other purchasers thereof, all of which it is charged is for the purpose and object of lessening the competition and creating a monopoly in the sale of said syrup, in violation of the laws of the United States.

The cause was submitted upon an agreed statement of facts. From this it appears: That the plaintiff is the owner of the trade-mark 'Coca-Cola,' and it has been used by it and its predecessor in title since May, 1886. That it was duly registered as a trade-mark in the United States Patent Office, in conformity with the laws of the United States, as set out in the complaint. That it has advertised the same throughout the United States and in foreign countries; and that over $10,000,000 have been expended by the plaintiff in advertising it. That it is made up for the public in two forms, as alleged in the complaint. That the following differences, among others, are made between the syrup 'Coca-Cola' manufactured to be used at fountains and that to be sold in bottles: In 1,250 gallons of the finished product the bottler's syrup contains 1,000 pounds more sugar than the other. It has 10 per cent. more coloring matter, to wit, caramel. It contains more phosphoric acid, and some percentage less of caffeine, than does the syrup made to be used at soda fountains. The fountain syrup contains 28 pounds of caffeine to 1,250 pounds of the finished product, while that used in the bottler's syrup contains only 25 pounds of caffeine to 1,250 pounds. That the plaintiff in its sales system has two methods by which the product is sold:

First. The system by which the syrup manufactured for fountain sale is sold to jobbers and dispensers, to be sold from the soda fountain; the jobbers selling it to the dispensers under a contract that the plaintiff will supply it only in the original package, that the jobber is not to sell or offer for sale as 'Coca-Cola' any imitation of or substitute therefor, and upon compliance with the terms of the contract plaintiff will allow certain rebates to the jobber, depending upon the quantity bought, provided that the sales have been to dispensers only, and none to bottlers, or for the purpose of carbonating in bottles. The dispensers' contract, which he is required to sign, obligates him that, when 'Coca-Cola' is asked for, he will only supply 'Coca-Cola' as manufactured and furnished by the plaintiff, not to sell or offer for sale as 'Coca-Cola' any imitation of or substitute therefor, and if he complies with these terms he is to receive a rebate, depending upon the quantity bought by him. The plaintiff does not enter into a dispenser's contract directly, but only through the jobber. The fountain syrup is never sold for the purpose of bottling, and is not made or intended for the purpose of having the same bottled.

Second. The syrup made for bottling purposes is sold to two corporations--one 'The Coca-Cola Bottling Company,' and the other 'Coca-Cola Bottling Company.' This sale is made under and by virtue of contracts entered into between the plaintiff and the bottling companies. There was an original contract, which was later amended. The original contract was made on the 21st day of July, 1899, and by this contract the bottling company obligated itself to establish in the city of Atlanta, Ga., a bottling plant for the purpose of bottling this syrup, with carbonic acid and water, and to prepare and put up in bottles, or other receptacles, a carbonated drink containing a mixture of 'Coca-Cola,' syrup, and water charged with carbonic acid gas under a pressure of more than one...